Problem 1:

On the basis of expected Rate, Standard Deviation, Variance and Coefficient of variation decided which of the following company is best for investment (Single company Risk analysis).

Solution:

On the basis of above mention risk indicators Company H is best.

Problem 2:

Following are the probability distribution of returns of portfolio of Stock A and Stock B in equal proportion of weight in each state of economy. You are required to calculate Expected Return and Risk for individual Stocks?

Solution:

Answer: 14.14

Answer: 14.14

Problem 3:

If you deposit Rs. 1,000 in the bank at a nominal interest rate of 6 percent, you will have Rs. 1,060 at the end of the year. Suppose that the inflation rate during the year is also 6 percent. Find real amount in Rupees?

Solution:

Answer: Rs. 1,000

Problem 4:

You save Rs. 100 and invest it at a nominal interest rate of 8%. Given the expected inflation is 5% per year, what is the real rate of return?

Solution:

Answer: 2.87%

Problem 5:

Suppose the current market value of Rs. 100 and no dividend income after one year. Find expected Rate of Return?